What Court Are Bankruptcies Filed In?

You may wonder how common it is for people facing financial difficulties to turn to bankruptcy as a solution. That number has been between 750,000 and 840,000 per year for non-business bankruptcy filings alone. If you have never personally filed, you probably know someone who has. Filing for bankruptcy can seem to be a confusing or even frustrating process. The purpose of this article is to help you gain a better understanding of this process and hopefully eliminate some of the frustration.

Bankruptcy: A Clear Definition

Bankruptcy is the legal process by which people or businesses who find themselves unable to repay debts owed to creditors may seek relief from part or all of their debts. This results in the creditor being unable to collect any part of the debt previously owed, relieving the financial burden of the debtor. In most cases, the bankruptcy filing is initiated by the debtor.

Individuals seeking to file for bankruptcy have a couple of options. One available option is called chapter 7 and allows one to have the entirety of his debts forgiven only after any liquid assets have been used to repay a portion of the debt. In order to qualify for this type of filing, one must be able to prove that his income is lower than his state’s average family income. If one cannot pass this test, the second option may still be available. If the individual seeking to file for bankruptcy makes more than the average family income for his state, then he may file a chapter 13 claim. This option allows the debtor to set up a payment plan over three to five years, over which time he must make his payments to the courts. It is important to keep in mind that a bankruptcy remains on one’s financial record and credit history for a minimum of seven years. Because of this, it should only be the final attempt to exempt oneself from outstanding debt.

What Court Are Bankruptcies Filed In?

There is only one place where bankruptcy cases can be heard and that is the federal courts. The general trial court where most cases are held is called a district court. District courts handle cases within their jurisdiction under the federal court system, including bankruptcy cases. Of the district courts, there are specialized bankruptcy courts. Having such specialized courts to hear bankruptcy cases is essential due to the many intricacies and details that bankruptcy involves. For example, a bankruptcy judge would have to decide which chapter should be filed under, be involved in how each claim is processed and which debts are forgiven, and how repayment plans are set up. While bankruptcy judges can also rule on non-bankruptcy cases, his main area of expertise is the bankruptcy court.

So what court should you file in? If you find yourself contemplating filing for bankruptcy, it is essential that you know which court in which to file. In accordance with federal laws, one must file his bankruptcy case in the same federal district as is his primary residence, or where the majority of his assets lie not beyond 180 days of filing. The place where one resides the larger part of the year is considered his primary place of residence, even if he splits his time between locations. Once a person has defined his primary federal district, he may choose a court by going online to the federal courts finder, choose the option for bankruptcy court, select his location on the map provided, then find the nearest bankruptcy court.

If you are facing debts you cannot figure out how to repay, filing for bankruptcy may be your only option but one that can find you financial relief. Although it can be a rather baffling process, you can relieve some of the stress by familiarizing yourself with the way the court system works. As with any case, finding a capable attorney familiar with the bankruptcy process like those at Hausen Law, LLC is the best thing you can do for your case. Contact us today for a free bankruptcy consultation.